Inc. in Business Name, Independent Contractor and LLC Members & Managers

A bowl of ‘alphabet soup’ results from the many acronyms that makeup titles, names and descriptions of a contractor’s potential roles in a company organization. Another ‘short’ question and we help a young contractor hoping to make a ‘name’ for himself…

Q:  I understand the requirements for the RME (min. 32 hours per week, etc.) and RMO (min. 20% equity), but in the case of a Limited Liability Company (LLC), I need to know what are the minimum working requirements and responsibilities for the responsible managing manager or a responsible managing member? And also are these requirements different for CA, NV and AZ?


A:  First, let me make a correction to your first statement.  While you are correct that RME’s are required to work a minimum of 32 hours per week or 80% of the company’s operating hours, whichever is less, RMO’s are not required to have a minimum of 20% equity.

Now to answer your question, an LLC can have a Responsible Managing Employee (RME), a Responsible Managing Officer (RMO), a Responsible Managing Manager (RMG), or a Responsible Managing Member (RMM).  RMG’s and RMM’s are similar to RMO’s in that they don’t have a minimum hour requirement that they must abide by, but they are responsible for exercising direct supervision and control of the company’s construction operation.


Nevada does not have the titles RME, RMO, etc., however they are more detailed about the specific duties that they require of Qualifying Individuals.  There is no hour requirement for Qualifying Individuals in Nevada, however they must be a bona fide member or employee of the company and they are required to exercise authority in the company’s contracting business. This includes making technical and administrative decisions; hiring, promoting, directing, etc. other employees either directly or through others; and to devote themselves solely to the business and not take other employment that would conflict with their duties.


Arizona also does not use the terms RMO, RME, etc., nor do they have an hour requirement for the Qualifying Party on a license.  Arizona requires that while an individual is acting as a Qualifying Party, they “shall not take other employment that would conflict with his duties as qualifying party or conflict with his ability to adequately supervise the work performed by the licensee.”


Q:  I currently work for a company that has a “C-10” electrical license. I have my electrician certification.  I want to be an electrical sub-contractor for my current company and my buddy’s company that also has a “C-10” license.  If both companies hire me as an Independent Contractor, can I work under their licenses or do I need my own “C-10” contractor’s license?


A:  If the work you would be doing goes over $500.00, you would need to have your own individual “C-10” license.  Even though you may consider yourself “employed” by the two companies, you are not technically an “employee” of each entity and therefore you cannot do work under their license. Independent contractors are by definition not employees.

Q:  I have worked for my Dad for over 10 years and he has a corporation, ABC Inc., with the “A” General Engineering license.  I want to get a “C-8”concrete license, completely separate from his company, but I want to use the same business name.  Can I get a Sole Owner license and call it ABC Inc. if my Dad notifies the CSLB that he approves?

A:  The CSLB is not going to let you include “Inc.” at the end of your business name as that implies that you are a corporation.